by Dana Blankenhorn
Volume IV, No. XLVIII
For the Week of November 27, 2000

This Week's Clue: Secrets of Small Business Success

This Week's Clue: Secrets of Small Business Success

SSP (Shameless Self Promotion)

Taking the World Wide Out of the Web

Scaled vs. Unscaled ISPs

Rise or Fall of Internet Commerce?

Clued-in, Clueless

A magazine interviewer's questions reminded me this week of how small businesses can, do, and will succeed online.

The first key is specialization. Friedman's Shoes in Atlanta was a small store in a dying neighborhood before it discovered that NBA players have big feet . This success was easy to translate online, despite a small, bland site. 

There are all sorts of specialties. There are product specialties, service specialties, and content specialties. By specializing you get depth larger rivals can't match. Even if the rival has lower prices, your knowledge of the field gives you an edge, and real market share. 

How do you choose your niche? The key word, as with this newsletter, is passion. Ask yourself what you care about most, what you would do for nothing. That's where your specialty will lie. Your chance of success is greatest when you really enjoy what you are doing. That passion comes through online. 

How do you gain the knowledge and reputation you need to make it in your chosen niche? That's where the Internet really shines. The Web and e-mail are both great research tools, but they're also very cost-effective means of making your views known. What they require from you are time, not money. Again, this is something big companies can't afford. Their efforts are diffused by size. Yours are not. 

Once you have your niche, know your niche, and are known in your niche, you must identify the elements that make a successful Web business. You do need technical expertise, marketing expertise, and (this is important) management expertise. This trio of skills makes up your key team. You bring these key people along by making them stakeholders in what you're doing, not just employees. 

The full meaning of my favorite phrase, "Confederate Money," is becoming clearer every day to the Web's critics. But the need to bring confederates together, through a common currency, is greater than ever. The value of that currency will fluctuate. What seemed golden a year ago now looks worthless. That, too, will change. 

Finally, the key to keeping the customers you get is service. Make every customer service call an opportunity to thrill someone. That's how you build "word of mouse," and dominate larger opponents. Large companies see customer service as a cost, and an opportunity to up-sell. Don't make that mistake.

All these things are basic. They work when you're building any business, online or offline. That's important to recognize as you move ahead. The differences between building online and offline businesses, and how they operate, are becoming invisible. Clues to Internet Commerce are becoming Clues to Commerce. 

Welcome to the 21st Century. 

SSP (Shameless Self-Promotion)

We're now a syndicate! I've begun self-syndicating the columns and items of A-Clue.Com to Web sites and print publications. The base rate for a Web site is just $100/week - which includes the weekly Clue column, the separate news features, and our most popular feature, Clued-in and Clueless. Your site will be able to publish this content each Monday, the formal date of publication. Drop me a line  for more information. I've also launched a weekly column at WorkZ, aimed at the needs of small business. I hope you check it out.

You can join the A-Clue.Com discussion by joining I-Strategy, a new e-mail list that replaces the discussion section here at a-clue.com . I-Strategy covers your future and that of the Internet. It will be lively, take just a few minutes to go through, and provide a host of voices other than my own. Please subscribe to it .

I'm still making myself available for consulting to a limited number of clients, with an eye toward assuring their long-term success. If you're interested give me a shout at 404-373-7634.

Also, please pass this along to friends and urge them to join our list. And don't forget our new e-mail address . My Clues come from daily writing for ClickZ. I write monthly for Crain's B2B, and Boardwatch. I've just started writing regularly for WorkZ  and my monthly column will launch next year in Publish Magazine. I have written for Internet Content and Advertising Age  as well. Yes, I'm very busy, but you can still buy my book.

Remember that it's journalism that keeps the Clues coming...

Takes on the News

Taking the World Wide Out of the Web

The biggest stories of the year 2000 involved the return of business disciplines to the Web industry. The big story of 2001 will be attempts by national governments to enforce contradictory laws on the Web.

France is demanding that Yahoo shield its people from auctions of Nazi artifacts that are legal in other countries . The decision is based on a report from government experts asserting that 90% of users could be kept out of such auctions if ISPs were "simply" required to filter-out those IP addresses containing the auctions . (Increasing the burden of running an ISP means fewer ISPs, poorer customer service, and unhappy Web users, but that apparently never occurred to the authorities.)

Mandating that ISPs filter access at their servers is considered a Chinese game, but it would be more appropriate at this point to call it a government game. Motivated users can get around server-side filters, but filters do work against casual users. Governments figure that if they can assure themselves that most people are complying with their content restrictions, they can then mandate usage tracking to catch most of the rest.

Mandating that ISPs control and report to government on their users remains the key feature of the Cybercrime agreement now being completed by the Council of Europe in Strasbourg . While the treaty is being created on behalf of democratic governments it is not being created democratically. Instead, it is being written in secret by cops and spies.

Thus the treaty makes certain types of software illegal, and mandates that all ISPs keep records on users that will be made available to any police agency in a country signing the treaty. As with all moves against human rights worldwide, the existence of vicious crimes like child pornography is used as an excuse.

The result of all this will be an arms race, in which government opponents worldwide seek to distribute the tools of the underworld in order to maintain rights all governments are supposed to guarantee. This is the world of William Gibson's "Neuromancer" and it is becoming a reality in our time, before our eyes. In this world those with the greatest technical knowledge will have the greatest freedom of action.

Teach your children well. Freedom comes only with education.

Scaled vs. Unscaled ISPs

The agreement by AOL-Time Warner seems to end the fight over open access to cable networks but so long as the agreement remains a secret that will be unclear.

The fear of small ISPs like Stephen Heins of Northnet  remains that cable companies will offer carriage only to their largest rivals, and on terms that guarantee they'll carry most of the traffic.

Heins and his brethren have some serious issues, starting with how AOL justifies its 18-month head start on any competitor. (The Earthlink agreement doesn't come into effect until the second half of next year.)

But that's not all. They want to know about a reported $50,000 deposit ISPs must pay in order to start the process of getting on the cable. They want to know if they can present content that Time Warner Cable doesn't offer. They want to know who will control set-top boxes in customer homes that get data service from competitive ISPs, and whether this agreement becomes the "definitive business model for open access."

Earthlink is right to celebrate this deal , but if it was done at the expense of smaller ISPs this could all be part of a telco squeeze play. Remember, please, that Sprint owns a big hunk of Earthlink, and could easily take the rest. While Earthlink has a lot in common with small ISPs (great customer service, for one thing), it also has more and more in common with telco-based ISPs.

Rise or Fall of Internet Commerce?

In the latest stage of the Internet Recession, leading stock analysts are being figuratively "taken out and shot" but the press is being too selective.

Instead of picking on small brokers and entrepreneurs like James Cramer, it's time to admit that people like Henry Blodgett and Mary Meeker were nothing more than shills. When a broker underwrites a new company's stock, then sends an "analyst" to give the stock rave reviews, there's a basic conflict of interest, one that has never been acknowledged by Wall Street.

It's true that no pundit is going to make you money all the time. (That's just one reason why I don't make stock picks here.) An investing "system" is like a "system" for winning in Las Vegas. If it worked for everyone it wouldn't work. Also, every assumption underlying every form of analysis is going to be turned on its head at one point in the market cycle or another. Even the "buy and hold" strategy has failed for (so far) 13 years in Japan - that market still trades at less than half its value at the market's 1987 peak. That strategy also failed for 25 years in the U.S. - that's how long it took for averages to return to their 1929 levels, assuming the 1929 investor was lucky enough to own only companies that made it to 1954 alive.

There's one other strategy that never works, and that's predicting doom and gloom . When Michael Mandel's talk of a "Net Depression" is taken seriously by investors, then I guarantee you it will be time to buy. The rule is the same on the upside. When paid shills like Meeker and Blodgett are treated like Gods it is time to sell.

Clued-in, Clueless

Clued-in is Garry Trudeau's Michael Doonesbury, whose "myvulture.com" business plan - liquidating failed merchandise from online merchants - turns out to actually make a lot of sense .

Clueless is Doonesbury's online syndicator  for letting the URL myvulture.com get away. It's now owned by Boo.Com, which throws three flash screens in front of its home page to keep naïve users from escaping via the "back" button on their browsers. (Try it - it's a new high in low.)

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